Computer-assisted audit tool (CAATs) or computer-assisted audit tools and techniques (CAATTs) is a growing field within the IT audit profession. CAATs is the practice of using computers to automate the IT audit processes. CAATs normally include using basic office productivity software such as spreadsheets, word processors and text editing programs and more advanced software packages involving use statistical analysis and business intelligence tools. But also more dedicated specialized software are available (see below).
CAATs have become synonymous with data analytics in the audit process.
The traditional method of auditing allows auditors to build conclusions based upon a limited sample of a population, rather than an examination of all available or a large sample of data.
CAATTs, not CAATs, addresses these problems. CAATTs, as it is commonly used, is the practice of analyzing large volumes of data looking for anomalies. A well-designed CAATTs audit will not be a sample, but rather a complete review of all transactions. Using CAATTs the auditor will extract every transaction the business unit performed during the period reviewed. The auditor will then test that data to determine if there are any problems in the data.
Another advantage of CAATTs is that it allows auditors to test for specific risks. For example, an insurance company may want to ensure that it doesn't pay any claims after a policy is terminated. Using traditional audit techniques this risk would be very difficult to test. The auditor would "randomly select" a "statistically valid" sample of claims (usually if any of those claims were processed after a policy was terminated). Since the insurance company might process millions of claims the odds that any of those 30–50 "randomly selected" claims occurred after the policy was terminated is extremely unlikely.
Using CAATTs the auditor can select every claim that had a date of service after the policy termination date. The auditor then can determine if any claims were inappropriately paid. If they were, the auditor can then figure out why the controls to prevent this failure. In a real-life audit, the CAATTs auditor noted that several claims had been paid after policies were terminated. Using CAATTs the auditor was able to identify every claim that was paid and the exact dollar amount incorrectly paid by the insurance company. Furthermore, the auditor was able to identify the reason why these claims were paid. The reason why they were paid was because the participant paid their premium. The insurance company, having received a payment, paid the claims. Then after paying the claim the participant's check bounced. When the check bounced, the participant's policy was retrospectively terminated, but the claim was still paid costing the company hundreds of thousands of dollars per year.
Which looks better in an audit report:
"Audit reviewed 50 transactions and noted one transaction that was processed incorrectly"
or
"Audit used CAATTs and tested every transaction over the past year. We noted XXX exceptions wherein the company paid YYY dollars on terminated policies."
However, the CAATTs driven review is limited only to the data saved on files in accordance with a systematic pattern. Much data is never documented this way. In addition saved data often contains deficiencies, is poorly classified, is not easy to get, and it might be hard to become convinced about its integrity. So, for the present CAATTs is a complement to an auditor's tools and techniques. In certain audits, CAATTs can't be used at all. But there are also audits that simply can't be made with due care and efficiently without CAATTs.
In the most general terms, CAATTs can refer to any computer program utilized to improve the audit process. Generally, however, it is used to refer to any data extraction and analysis software. This would include programs such as data analysis and extraction tools, spreadsheets (e.g. Excel), databases (e.g. Access), statistical analysis (e.g. SAS), generalized audit software (e.g. ACL, Arbutus, EAS), business intelligence (e.g. Crystal Reports and Business Objects), etc.
Benefits of audit software include:
Audit specialized software may perform the following functions:
CAATs are the fundamental tool that is used by the auditors. This tool facilitates them to make search from the irregularities from the given data. With the help of this tool, the auditors and accountants of any firm will be able to provide more analytical results. These tools are used throughout every business environment and also in the industry sectors too. With the help of computer-assisted audit techniques, more forensic accounting with more analysis can be done. It’s really a helpful tool that helps the firm auditor to work in an efficient and productive manner. Working with the CAATs, it is essential for the accountant or the auditor to select the right data, the selection process is very much tricky, and you need to be professional for it. After selecting the right data, import that to the CAATs, now the tool will automatically generate the analytical data. This tool contributes to the efficiency of the auditors. The fundamental course outline [1] include:
There are several certification programs from various CAATs vendors and professional associations as the following:
In addition to using data analysis software, the auditor uses CAATs throughout the audit for the following activities while performing data analysis:
Keeping electronic work papers on a centralized audit file or database will allow the auditor to navigate through current and archived working papers with ease. The database will make it easier for auditors to coordinate current audits and ensure they consider findings from prior or related projects. Additionally, the auditor will be able to electronically standardize audit forms and formats, which can improve both the quality and consistency of the audit working papers.
CAATs provide auditors with tools that can identify unexpected or unexplained patterns in data that may indicate fraud. Whether the CAATs is simple or complex, data analysis provides many benefits in the prevention and detection of fraud.
CAATs can assist the auditor in detecting fraud by performing and creating the following,
Evaluations of financial information made by studying plausible relationships among both financial and non-financial data to assess whether account balances appear reasonable (AU 329). Examples include ratio, trend, and Benford's Law tests.
Reports produced using specific audit commands such as filtering records and joining data files.
Continuous monitoring is an ongoing process for acquiring, analyzing, and reporting on business data to identify and respond to operational business risks. For auditors to ensure a comprehensive approach to acquire, analyze, and report on business data, they must make certain the organization continuously monitors user activity on all computer systems, business transactions and processes, and application controls.
Curb stoning is the term for instances where a surveyor completes a survey form by making up data. Because some of the data should conform with Benford's law, this practice can be detected using CAATTs which provide the capability of performing such tests.
CAATTs and CAATs are used interchangeably. While CAATs has emerged as the more common spelling, CAATTs is the more precise acronym. The acronym CAATTs solves one of the two problems with defining the acronym. CAATs means:
Computer Aided (or Assisted) Audit Techniques (or Tools and Techniques)
The first "A" and the "T" can have two different meanings depending on who uses the term. By using the term CAATTs, one is clearly incorporating both "Tools" AND "Techniques."
| Product Name / Brand | Developed by | Latest stable version | Latest release date | OS | Software license | Open source | Comments | |
|---|---|---|---|---|---|---|---|---|
| Arbutus Software | 7.00 | 2021-05-31 | ||||||
| Audit Command Language (ACL) | Galvanize | 15.0 | 2020-10-31 | Starting 2014 provide a free Excel add-in | ||||
| QDAC.net. | 4.3 | 2015-05-15 | Available in full and auditfiles version | |||||
| Intrasoft Audit Support Computer Audit (Formerly known as ESKORT / SESAM) | Intrasoft International | 7.5[2] | 2021-03-31 | Requires Excel for showing graphs and result of Benford law analysis. | ||||
| humanIT | 9.0.5 | 2016-11-07 | ||||||
| Interactive Data Extraction and Analysis (IDEA) | CaseWare International Inc. | 11.1[3] | 2016-10-26 | |||||
| TeamMate Analytics (formerly TopCAATs) | Wolters Kluwer | 5.1 | 2017-09-18 | Requires Microsoft Excel (TeamMate Analytics runs within Excel) | ||||
| SoftCAAT/ eCAAT[4] [5] | Wincer Infotech Limited | 9.0/ 9.0 | 2016-04-04 | SoftCAAT is an independent application. eCAAT requires Microsoft Excel (eCAAT is an Excel add-in) |
The following table compares features of specialized computer-aided audit tools. The table has several fields, as follows:
| Product Name | Age Analysis | Benford's law | Calculated field | Drill-down (Table) | Drill-down (Pivot) | Matching | Matching (Fuzzy) | Sample (Random) | Sample (Monetary unit) | Sequence Check (Gap) | Sort field | Sort multiple fields | Statistics | Stratification | Total row | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Analyzer - Arbutus Software | ||||||||||||||||
| Audit Command Language (ACL) | ||||||||||||||||
| Easy2Analyse (QDAC.net) | ||||||||||||||||
| Intrasoft Audit Support Computer Audit | ||||||||||||||||
| Interactive Data Extraction and Analysis (IDEA) | ||||||||||||||||
| TeamMate Analytics / TopCAATs | ||||||||||||||||
| SoftCAAT/ eCAAT |
| Product Name | Audit log | Data graph | Export (CSV) | Export (DBF) | Export (Excel) | |
|---|---|---|---|---|---|---|
| Audit Command Language (ACL) | ||||||
| Easy2Analyse (QDAC.net) | ||||||
| Intasoft Audit Support Computer Audit | ||||||
| Interactive Data Extraction and Analysis (IDEA) | ||||||
| TeamMate Analytics / TopCAATs | ||||||
| SoftCAAT/ eCAAT |
| Product Name | Append/Merge | Import wizard | Import (CSV) | Import (DBF) | Import (Excel) | Import (SAF-T) | Import (SIE) | Import (XBRL-GL) | |
|---|---|---|---|---|---|---|---|---|---|
| Analyzer - Arbutus Software | |||||||||
| Audit Command Language (ACL) | |||||||||
| Easy2Analyse (QDAC.net) | |||||||||
| Intrasoft Audit Support Computer Audit (SESAM) | |||||||||
| Interactive Data Extraction and Analysis (IDEA) | |||||||||
| TeamMate Analytics / TopCAATs | |||||||||
| SoftCAAT/ eCAAT |